Her comments came as she introduced to the House of Lords the legislation establishing the new regime, which will allow the Northern Ireland Executive and Assembly the power to set their own rates from 2017.

Lady Randerson told peers: "Northern Ireland has a unique economic position within the UK.

"It shares a land border with a very low corporation tax environment of the Republic of Ireland, it is more dependant on public sector, with around 30% working in the public sector compared to 20% in the rest of the UK."

She said per capita prosperity was consistently 20% below the rest of the UK and there was the ongoing challenge of dealing with "the legacy of the Troubles".

"The Northern Ireland regime has been carefully designed to encourage the Executive to promote genuine investment that will create jobs and growth, while minimising the opportunity for avoidance and profit shifting."

She added: "This Bill will allow the Northern Ireland Executive greater power to rebalance toward a stronger private sector, boosting employment, growth and the standard of living in Northern Ireland with benefits to the wider UK."

For Labour Lord McAvoy said his party welcomed the move and would do "everything we can to facilitate the passage of the Bill".

Former speaker of the Northern Ireland Assembly Lord Hay of Ballyore welcomed increased investment and cuts in unemployment in the province.

Liberal Democrat Lord Alderdice said this was an opportunity for politicians on all sides to face up to the economic and political challenges of instituting a corporation tax rate which was closer to that levied in the Irish Republic.

Former assembly first minister and Tory peer Lord Trimble said the Bill was "no magic bullet". It might be very beneficial, but it might not.